Underlying price pressures in the United States failed to ease in May, with the core personal consumption expenditures (PCE) price index holding steady at an annual rate of 3.4%.
The figure, released by the Bureau of Labor Statistics, matched consensus expectations but underscored the persistence of inflationary headwinds that have kept the Federal Reserve on hold.
The 3.4% reading marks the highest level for the Fed’s preferred inflation gauge since October 2023.
The 3.4% reading marks the highest level for the Fed’s preferred inflation gauge since October 2023.
While the headline Consumer Price Index recently accelerated to a multi-year peak, the core PCE data confirms that underlying cost pressures remain entrenched.
The stagnation in disinflation progress is largely attributed to sustained energy costs driven by geopolitical tensions in the Middle East, particularly the ongoing conflict in Iran.
Markets had been pricing in a gradual return to rate cuts, but the resilience of core inflation complicates that narrative.